IS FOREIGN DIRECT INVESTMENT GROWTH CONDUCIVE? NEW EVIDENCES FROM SUB-SAHARAN AFRICAN COUNTRIES, 1980-2005

The paper investigates the impact of FDI on economic growth for a panel of 39 Sub-Saharan African countries for the period 1980–2005 in an extended Cobb Douglas production function. Taking into account the possible existence of endogeneity in FDI modeling, the study employs both static and dynamic panel data estimates. Results from the analysis suggest that FDI is an important element in explaining economic performance of Sub Saharan African countries and appears to be of the same importance private investment. Moreover the study confirms the presence of important endogeneity and indirect effect through granger causality tests.